100 Tenn. 89 | Tenn. | 1897
The decree of the Court of Chancery Appeals in this case is satisfactory to us, but there is a view expressed in the opinion which needs explanation, lest our concurrence in the result be understood as an approval of all the reasoning of the opinion, which we do not adopt. So much of the opinion as we refer to will be found in the following language: “We concur entirely in the views set out in the brief and argument of counsel for the defendant, Jonesboro Banking & Trust Company, and, as a most thorough discussion and exposition of this subject, and as thoroughly expressing our views, we adopt that brief, which is hereto attached as part of the opinion of the Court, both on the subject of pledge, which we have just- been treating, and upon the subject last mentioned. And we deem it only necessary to add further that, while we find the holding in Tennessee has been, in our opinion, against the great weight of authority in this country, and somewhat contrary to the best line of public policy, in that it had been held that negotiable paper taken in payment or as security for a preexisting debt, without more, is not taken in due course of trade, and does not constitute the holder an, innocent purchaser without notice, but among the many cases reported in this State, we have found no case which goes to the extent of holding that if there is an express agreement by which, in consideration of the security thus delivered, a definite extension is made, that such will not be a good
The Court of Chancery Appeals, in this connection, was discussing the doctrine of this Court as announced in connection with the transfer of negotiable paper, where the ruling has been that the in-dorsement of such paper to a holder will not be for value if it was in consideration of a pre-existing debt. It was, however, dealing in the main with the question as to notes payable in property, and which, under our law, are assignable, but. not negotiable, and, as to the transfer of which, another rule of law applies. Neither are we to be understood as
In the brief which the Court of Chancery Appeals quotes, and which it adopts, there is this language: “The transfer, by due indorsement, of negotiable or assignable paper, before maturity, upon a consideration passing at the time and without notice, vests the assignee or indorsee with the title thereto as against all the world. There is no difference, with reference, to the protection thus afforded, between paper which is negotiable by the law merchant and that which is assignable without notice under our statute. The holder of each is fully protected.” This, without qualification, is liable to misconstruction.
It was in reference to the following facts that the Court of Chancery Appeals was speaking and quoting: The complainant had sold to the defendant, Hunt, a large quantity of fertilizer and taken his personal obligation to pay therefor. It was contein-
Among the notes which were pledged by Hunt to the Jonesboro Banking & Trust Company, it would seem from a reference in the opinion of the Court of Chancery Appeals, there were a few payable in cash, but the great number of them were payable in property, and were not negotiable notes and did not stand upon the same footing, of course, in many respects.
This rule is fully and accurately stated in the case of Taylor et al. v. Pope, 5 Cold., 413, where, speaking in reference to property transfer, the Court said : ‘ ‘ Mere possession alone does not vest the agent with power to give the purchaser, however innocent, the right of property against the owner. Nor is it enough so to do that the owner put the agent into the possession. Something more must be coupled with such possession to enable the agent to effect a valid sale to a purchaser against the will
In the 5 Coldwell case, as stated, the Court
But as to 'the defendant’s right, so far as the holding of either is concerned against the true owner, it depends upon the fact that he gave value at the time of the transaction. What the bank did was to extend to a definite period the time of payment of pre-existing debts thus secured by the deposit of these notes as collateral, and upon consideration of this deposit, and this was a valuable consideration for 'such transfer. That the extension by contract of time of payment, to a fixed and definite period, of a pre-existing debt, is a valuable consideration is held in States holding with the Courts of this State that the transfer in consideration of pre-existing debt
To this extent in this State the same rule prevails in respect to transfer of property as of negotiable paper. It has been held by this Court that if a fraudulent vendee acquire possession of property and transfer it to another for a valuable consideration, and without notice of the fraud by which it was obtained, the last vendee will be protected, but he will not be protected if not a purchaser for value. Arendale v. Morgan & Co., 5 Sneed, 703. This distinction is taken between the transfer of property acquired by fraud and acquired by theft: the thief can convey no title to any purchaser; the fraudulent vendee can convey a title to an innocent purchaser — that is, to one who purchased without notice and gave value at the time. lb. Many of the States of the Union in .which it is held, as it is in this, that the payment of a pre-existing debt, or the pledge of property as collateral upon a preexisting debt, is not a payment or pledge for value, have held that it is so, if such pledge of collateral on a pre-existing debt is made in consideratin of an agreement, for a definite extension of time of payment of the debt, made when the collateral was de livered; and, so far as we can find, this proposition
Mr. Jones in his work on pledges, Sec. 40, says: “It is a well-settled principle that a delivery back of the possession of the things pledged terminates the pledgee’s title, unless such redelivery be for a temporary purpose only, or be to the pledgor in a new character, such as special bailee or agent.”
“But if pledged property, which has been redelivered to the pledgor for a special purpose, be sold by him in violation of the agreement under which possession was redelivered to him, the purchaser, having acted in good faith, can maintain his title against the pledgee. Thus, the fact that the pledgor of a horse obtained possession for a special purpose, such as to drive for a few miles- to visit a relative, upon the promise to return it in a day or two, and while on the visit traded this horse for another, does not enable the pledgee to recover the horse from the purchaser. The decisions in these cases rest upon the general principle that one who voluntarily allows personalty to pass into the possession of another is bound by the fraudulent acts of the latter, and cannot reclaim the property in the hands of an innocent purchaser for value without notice.” Sec. 47.
To be strictly accurate, this last statement should have been that one who voluntarily allows personalty
The result is, therefore, that complainant has no right of recovery against the bank, either on account of negotiable paper or that non-negotiable and merely assignable. The other questions are disposed of by the Court of Chancery Appeals to our satisfaction, and its decree is affirmed.